Analysing The Incremental Value of Cashback

The question of incremental sales has long been questioned both for cashback as well as the affiliate channel as a whole. Working in the sector (at TopCashBack.co.uk) I often face questions from merchants and networks around the value that cashback provides. From questions like “would we have got the sale anyway?” to the often trodden “do cashback sites ‘steal’ sales?” there has always been much debate around the value that can be offered.

Networks like Affiliate Window have published and presented figures on the number of cookies overwritten to gain an understanding of the touch points in a transaction. Speaking for TopCashBack, we regularly present figures to clients on promotions we have run. These look at key figures such as market share before and after, percentage of new customers and sales increases.

We wanted to take this one step further and gain a better understanding of how consumers use cashback sites. We therefore commissioned an independent third party to carry out some research on our behalf, with a number of questions around how cashback members use the channel and the effects on their purchasing decision. A cashback user was defined as somebody who had used any cashback site in the last 12 months, and the researchers questioned a good sample size of 755 cashback users.

There were a number of interesting findings from the research that help us to better understand the influence of cashback in the buying process. An interesting finding is that 52% of users purchased from brands that they had never considered before (figure 1.1). This figure highlights the influence that cashback can have on the final decision. The ‘we would have got the sale anyway’ argument could fall down as over half of the users have bought from people they would not have considered. This is further supported by 25% stating that the cashback sites give new ideas when it comes to purchasing products.

Figure 1.1 To what extent do you agree or disagree with the following?

Defining 'Incrementality'

The viewpoint that getting new customers to a brand is the true measure of incremental value could be argued to be flawed, as it assumes that once a customer purchases from you once, they will continue to purchase from you for life. The money spent on branding and customer retention would suggest that this is not the case. Is an incremental sale someone who has not bought from you before? Or is it someone who didn’t necessarily intend to purchase from you again?

What the figures do show is that the cashback on offer is a variable considered by consumers when evaluating options. Indeed 32% of users started their research into products at a cashback site (figure 1.2). While detractors argue cashback is used once they have decided what to buy and where, the research puts cashback sites at the beginning of the search for a third of people. The cashback offered can even help to originate a need to purchase. This is supported by 16% browsing a cashback site and deciding to make a purchase based purely on the offers. This figure suggests to gain more incremental value merchants should be look to increase the regularity of promotions to maximise coverage on site. Increased exposure helps to put brands in front of more people who may not have been looking for it. This is where cashback can offer the biggest boost to incremental sales.

Figure 1.2 Thinking about a purchase in general now, which of the following statements apply?

The Influence of Cashback

The research does help to gain a better understanding of the influence cashback can have on the purchase decisions. It is also important to look at the key learnings. It is clear from the results that cashback influences both the final decision but also the recognition of a need to purchase. The argument of incremental value will always rage on but to justify the channel its important too look at how this value is measured and judged. Key questions to ask include:

How do you define incremental sales?

Is this the same way that you would judge other channels both online and offline?

Is your marketing activity supporting the increase in incremental sales? Are you doing promotions to be more visible?

Does your affiliate know your objective for the campaign?

Summary

Answering these questions is the first step to making sure you get more from cashback sites and affiliates in general. By doing this you can understand what is incremental for you and how best to achieve this. What is classed as incremental will vary from client to client but the research points to the fact that decisions happen on cashback sites and being featured more prominently would increase the chance of being considered.

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Graham Jenner

Graham Jenner is Head of Partnerships at TopCashBack. Graham manages Top Cashback’s Partnerships department, the team that helps to understand and achieve client’s objectives. His role involves developing relationships with key merchants and networks and consulting on strategy. Graham has been involved in the campaigns that have won the ‘Advertiser Innovation’ award for the past two years at the Performance Marketing Awards.

Prior to joining Top Cashback, Graham worked at affiliate network Digital Window, managing key accounts such as T-Mobile and Game. He is a regular guest writer for a number of different digital marketing sites, where he offers advice on best practice and the essentials of affiliate marketing.